Assessment of costs

To inform our review of fee levels, we have undertaken a staged
assessment of our current costs.

We began by undertaking a cost of time analysis, by identifying
each stage in our process, the time associated with each task and
the staff level at which each task is undertaken. Time recording
was undertaken across the full range of application types for which
fees are charged, looking at applications for different
technologies and of different levels of complexity to develop an
understanding of typical or average costs to the Energy Consents
Unit and Marine Scotland Licensing Operations Team of each stage in
our process.

We have critically evaluated where our processes could be made
more efficient and could meet the changing priorities due to the
diversification of the marine sector. We have already sought to
remove duplication from our processes; to ensure that tasks are
being undertaken at the appropriate experience/ cost level; and
have focussed our resource on those areas which add greatest value
to the process and to outcomes.

We have identified further improvements that we would like to
deliver. In particular, we would like to respond to demands to more
proactively project manage application processes to deliver greater
certainty around determination timescales. We intend to continue to
support discussion with a range of consultees at pre-application
stage to streamline the application process, and to avoid instances
where additional information has to be sought from applicants. We
intend to continue to proactively engage with communities,
interested parties and stakeholders potentially impacted by
proposed developments, to increase their confidence in our
application processes. We have given in depth consideration and
successfully piloted measures to deliver these aims, and have
assessed the resource requirement for supporting these services for
all applications going forward.

We have considered the wider impact of the introduction of the
Electricity Works (Environmental Impact Assessment) (Scotland)
Regulations 2017. In introducing these regulations, Ministers
sought to minimise any additional regulatory burden and ensure
protection of the environment, and there will be some additional
process and resource requirements for Scottish Ministers in
discharging their regulatory responsibilities.

We have given consideration to alternative models, including
charging hourly rates to provide an accurate and application
specific cost recovery model. However, we prefer to maintain a
fixed fee to avoid uncertainty to applicants and the potential for
increasing administrative costs which would be passed on to
applicants. We have also given consideration to alternative
thresholds for application costs, such as the total area included
within red line boundary. However, it is our view that generation
capacity or length of line provide a fairer indication of
complexity and cost of processing applications for energy
infrastructure. We propose to continue to set fee levels by
reference to the consented capacity of generating stations or
length of overhead lines.

Having developed a detailed understanding of costs that we would
seek to recover through our fees, we have balanced the desire for
cost recovery against impacts on industry. We are sensitive to
market pressures which currently affect developers in energy
industries. We have considered the extent to which Scottish
Ministers can continue to bear the shortfall in costs experienced
to date, having regard to the standard approach to setting charges
for public services as set out in the Scottish Public Finance
Manual which is full cost recovery. We have undertaken a
comparative assessment of our fees against other consenting
authorities and jurisdictions to arrive at proposed fee increases
which we consider to be reasonable in the context of current market
conditions.

The assessment of application costs is not an exact science, but
we have given careful consideration to the fee levels proposed in
the consultation paper. On balance, we consider that the proposed
fee increases are necessary and proportionate. We would welcome
your feedback.